The Owner Dependency Trap: When You're the Bottleneck

My business is different, right? Yes, you are unique. Maybe where you are in the world is a little bit unique, but you're still part of the same industry. So, you know, I hear my business is different from landscapers, caterers, lawyers, builders, HVAC guys, plumbing and heating, electricians, dentists, right? You're not different in a lot of respects. Maybe 1% different, right, in terms of how you manage your company or the name on your truck is different from the other person, right? That's the thing. Your business isn't different. Your ego is, right? What's actually happening when you say that is that you haven't documented the decisions. You haven't built a system. You haven't trained your team, right? All of that is fixable, but what you're doing when you're saying I'm different is that you're dodging it. You're dodging the things that need to happen for you to scale. So it's not that your team can't make a decision, it's

that you haven't given them what they need to make it, right? And that's a system, that's a process that's going over and saying it's okay to make a mistake. This is where you went wrong. Now it's a teachable moment. And so you don't allow them to make the same mistake twice. That's how you learned. You made a mistake, you fixed it, you figured it out, and then off you go, and then when you see something, you say, oh, you guys made a mistake here because I did that 15 years ago.

I did that three months ago. So you have to train them to do that. I mean, my business is different, is the adult version of my dog ate the homework. But guess what? Maybe once the dog actually did it. And that's because I didn't like the assignment, I put peanut butter on it and said go to town, Fido. So many ways I could react to that comment.

I'm going to react with the next question. Yeah, you react that way based upon experience, Jon. We just went over that. I have never peanut buttered my homework just to be clear. I know that donate to the local Humane Society. Yeah, I found a different excuse. There's a piece of the puzzle here that we call the Vine audit, right? Done this with clients before. What people threw it?

How does it work? Why does it work? Why is it the first step here? So I think you take pen to paper for five days, right? For five business days, you write down every decision you made, every approval, every, hey, I got a quick question, you know, and then you, any, you know, Slack ping, texts, anything like that, write them down. And by Friday, you'll have three whiteboards of stuff that has no business being on your desk, right?

You filled it up, you filled up the entire legal pad by Tuesday afternoon. And so, what you need to do is you take those decisions and you put them in three buckets. Delegate, automate, eliminate. About 20% of what hits your desk doesn't need a decision. It just needs to die. What are we going to have for lunch today, boss? Do you really need to make that decision? Or do you just delegate it? Or eliminate and say, you know what, everyone's going on a lunch diet today.

I tried that with my wife on that one, that one specifically. I don't care. Anything. Right. I got eliminated. And then you, yes, yeah, exactly. Exactly. I mean, in that case, it's like, well, just tell me what you want. Right? You want to go to your favorite restaurant? Fantastic. Let's just do that. I tried to automate. 20 minute exercise. I tried to automate. It didn't work either.

Uber Eats is arriving in 10 minutes. You'll like it. It'll be fine. That's right. That's right. So when you do that exercise, you're going to find that you're spending most of your time making decisions that do not bring your company forward, right? That other people with a process or a system could make those decisions. And it sometimes is literally what are we going to have for lunch, boss?

Do you really need to make that decision? Right? There's a lot of other things. You're going to miss it. Your kid's literally game or parent teacher conference to decide what you're going to have for lunch or if you should move an outlet three inches. Right? Like seriously, why don't you've got to empower your folks here. You've got to trust them in order to build trust. What needs to happen, they need to demonstrate to you that they can do something, but you've got to give them the tools to be able to demonstrate it for them. Do you want order takers or order makers in your business? If you have people running the job, you can't go second guess them in front of the crew. That's a private conversation that you have, or how about this, you actually make the decisions together before you actually have them execute the order, execute the decisions. And you have a problem.

What do you think we should do here? Well, I think we should do X, Y, and Z. That's a really great call, but what you don't know is X, Y, A, B, C. Okay, let's go over that now. Okay, now what should we do? It becomes a learning. It becomes teachable. And you start duplicating yourself in the decisions that they can make. Well, if they get that wrong, that's going to cost me $1,000. Great. Right? Let's not let them get that wrong by pre-planning, by having those conversations ahead of time.

Educate them. Educate them. Verify, trust, etc. That makes the delegation process a little less scary because it comes down to fear. Like, hey, I've felt it. You feel it all the time. I can't delegate that. We need to get it right. I need to build that because it's got to be bang on, right? So fear is an awful lot of the reason why people don't delegate. This episode is brought to you by Twins Plumbing and Heating out of the Manchester, New Hampshire area.

Hold on, wait. What? Plumbing? Yes. You? Yes. The guy who has said the word plumbing approximately 4,000 times on this podcast has a plumbing sponsor? It was inevitable. It was a cry for help is what it was. Profit First isn't a philosophy, it's plumbing. Cash flow is plumbing. The business is plumbing. Brian, have you personally ever fixed a pipe? I have hired people who fixed pipes.

That's exactly what I thought. Which is exactly the point. Twins Plumbing and Heating does the actual work. Plumbing, heating, the things that keep a house from becoming a science experiment. Manchester, New Hampshire and surrounding area, TwinsPH.com. So they do what you talk about? They do what I metaphor about. That's not a verb. It is now. What's underneath it? What's underneath that fear? Well, I think there's three fears, right? Fear one is that they'll do it wrong.

And true. Sometimes that will happen, right? But that's what we call learning. Nobody, you didn't ace every single exam in school, right? You didn't get hundreds or you didn't get A's. You didn't go out and stuff. You made mistakes, you learned from them, right? And then you carried on and that's what needs to happen here, is that everything needs to be a teachable moment. It's not a yell fast, it's why didn't you do that, blah blah blah blah blah. It's okay, we're here now, how do we get out of it and how do we avoid this in the future, right, and how do we move on? Or better yet, hey, you're gonna come up to a roadblock here pretty soon, so why don't we talk about how we navigate that? Imagine that, right? Being proactive instead of reactive and that's part of where learning takes you, is that if I can start seeing the roadblocks ahead instead of what happened and how I'm

gonna dig myself out of this, that's all part of gaining knowledge, right? Second one is if they can do it, what am I here for really? Like you're here to turn a screw for your company or are you out there to get the next profitable job? Are you there to cultivate a relationship? Nothing is stopping you from going on the job site or from pulling a tooth or anything like that but you've got to go out there and get more clients. We've got a friend of mine who has not read my book, who has not taken a lot of my advice, who needs to do it himself, needs to go on the sites, do everything, is running out of work.

For the first time since he opened up shop, he's starting to run out of work. And so now he has to go find it and he doesn't know how to do it because he's so used to answering the phone, taking the job, and then turning the screws. You can't do both. Eventually you run out of runway. And so that's now his new job. It's no longer being an electrician, right?

It's being the CEO of his company. And that's different skill sets, right? That's a different thing to do. But if he can empower his people to do the jobs, he can go out and find more jobs. And the number of people we talk to who are interested in selling their business, and they haven't realized this, they haven't got through this, that they're end-to-end on every piece of work and they don't realize how that devalues their business.

Because the more entrenched you are in the business, the less sellable it is. Because you're selling a job, you're not selling a piece of business to somebody else to just take over and own. So I think we talked about that a little bit in the last episode. I think, I don't know which episode it was, but we did when we talked about buying and selling. So that's a key component of this.

Like it's a necessary step that you've got to empower your team because it creates more value for your business as well. You're absolutely right. It happens occasionally. Yeah, sometimes. A hundred monkeys at a typewriter, man. A sentence will come out at some point in time. I listen to you. Right. I was going to say a broken clock is right twice a day, but close enough. No, that's more often than me.

I'll go with the mongrels and typewriter analogy because it's a little bit less frequent. That was fear number two. What's fear number three? Control, Jon, see it all the time. My way is the right way. This is the way we've always done it. That's the problem now. You're going to have a huge awakening in the next 6, 12, 18 months when AI becomes a tool, a new thing out there that's unavoidable.

And these new people who can get on top of AI or the new technology or the new way of doing things when they're going through their schooling, right? There's, hey, we used to do it this way, now we do it this way and we found that it's more efficient, it's safer, it's da da da da da. Well, we're not doing it that way because I've been doing this for the last 15 years and that's the way it's gonna go, right?

In order to give up control, you have to have the trust, but also, you have to understand that your way is not necessarily the right way. And that's the thing. And that's what empowers the people. So when someone shows you a new way to do it that might be a better way, that's the day that the student has become the teacher. And that's what should be a matter of pride, not, well, this industry is bypassing me.

Right? No. Go with it. Go with the new techniques. And that's a problem with a lot of people because people who need to have control, generally speaking, are not very good at reacting when their plans go to crap. I see it all the time. The first thing is, oh my God, what's going on here? It's crazy. You have to be proactive and reactive. In order to do that, you have to be able to trust in the people around you that you're hiring to do a job.

They are no longer order takers, they are now order makers. That means your hiring process needs to be bang on as well. We talk a lot about that in the SOS, Synergy Operating System. How the value based hires or making sure that the values of the organization exist in every single hire and you've defined those as super important because when you do that, when you let go of control and you have great people in the organization, you actually get surprised at how they can bring new ideas to the table and it improves efficiency, it improves execution as well because you can just oversee it and some of their thoughts bring other ideas to the table.

I've had it with my integrator for my organization. She stepped on board and just the level of organization and thought has just ramped up and she's young, very knowledgeable, experienced and it's affected the organization for the positive just by relinquishing that little bit of control of an area that I wasn't so great at. So I think you just have to be mindful and take those steps. Yeah, and I think Jon, more importantly is that if you're listening to this and you can't name which of the fears is controlling you, right?

Which of the fears is holding you back? It's probably all three. Yeah. Awesome. Okay. We talk an awful lot about Pete in our stories. He's also a factor in 3:17 AM, your soon to be released book, which covers the roadmap here of how to organize businesses. And a lot of these concepts are all in that narrative. Pete, $13 million owner approving every single vendor invoice.

Walk us through it. What happened there? How did we fix it? So one thing we should tell our listeners and viewers is that I changed the names, industries, and amounts for clients. So Pete happens to be an actual client, but this is not about Pete, right? I just like wanted to use the word, his name, Pete, if he's listening, right, so here you go, shout out to you, Pete. But this is nothing to do with you, right? So Pete in the book, right, and this is Synergy Hacked, this is my playbook, my internal playbook here where it's 3:17 AM is based upon in all the almost 30 years of experience, Jon, of doing this now. I'm getting old. It's 53,000 pages. Yeah, it's a lot. It's like 150,000. Yeah, that's crazy. It's 150,000 words.

29 and a half years to read it. Yeah, yeah, yeah. And it's like stereo instruction. So if you want to be a part of Synergy, this is one of your things that you have to do, is pretty much memorize this book. But, so Pete ran a, we'll call it a $13 million winter services company, right? And, you know, the employees called him the Penguin, which wasn't affectionately, it was more like the Batman Penguin, right?

And he's, you know, and if this is ringing true to you all, then you could be the bottleneck, but, you know, in at 5 a.m., first one in there, out at 9 p.m., approve every invoice over $500. You know, you got to review every quote over $10,000. You got to call every major client personally after storms and make sure that everybody's okay. You know, and his snowplow test answer is it won't last an afternoon. Right?

Quick break for our sponsor, Twins Plumbing and Heating, Manchester, New Hampshire area. Great company, great team. You know what they've got that you don't? A van? A team that runs without the owner. We just spent 30 minutes talking about owners who can't step away from their business, and I'm sitting here with a guy who personally edits every episode title before it goes live. That's a creative decision.

That's a bottleneck. Moving on. This plumbing and heating is the version of what you've been preaching for nine episodes. Plumbing and heating in the Manchester, New Hampshire area. The owner built the team, the team runs the jobs, the owner gets to actually go home. They've achieved what I tell other people to do for a living. Which is mildly awkward. I'm aware. TwinsPH.com. Listen to the experts, then hire the people who actually do the thing.

So what we did do is we delegated vendor management to Diana, his operations manager of eight years, right? And month one, she renegotiated the contract and saved $12,000. And this is a real life, this is from a real life, right? So names changed, that kind of stuff, right? And Pete was thrilled because when you are trying to do everything, you can't do everything well. You can't see everything.

When someone can dedicate, like Diana, hours to go through their vendor contracts, they're going to find things that you can't because you're just glossing over because you're making a decision, next decision, next decision, next decision. You can't really dig deep into these things. You can't dig into the weeds, whereas Diana, that's now her job. She's going to spend time to go through it and review it and make decisions and help renegotiate these things, right?

Month two, you know, she switched de-icing vendors. So the new vendor misdelivers on three job sites during the first December storm, it was a disaster. So she decided, I'm gonna change vendors. We're not gonna put up with that anymore, right? Now Pete's instinct was to take it back and say, listen, you're approving everything, I wanna approve everything now because, you know, the new vendor didn't work out.

We had to switch after month two. Things aren't going well. But the fact of the matter is that she swung and she missed. She learned from it. And now that second vendor was better than Pete's original vendor. And that was the whole reason to switch, was because the original vendor was just as bad as the one she switched to originally. But they sat down during that process.

They worked out an evaluation checklist. I remember this, and they sat down and worked out exactly how to select vendors going forward as well. So it wasn't just about that one new vendor relationship. Everything could snowball from that point onwards. Right, you're absolutely right, Jon, right? And they made what we call a procedure, right? That's that operation vendor checklist now. And so they use that for every single vendor that they do select.

They also did, they do a semi-annual review on their vendors as well, is how well their vendors are performing. So they're rating their vendors on performance now, and they're using that information to go in and renegotiate or negotiate with their vendors. And making sure that things are being done. So by Pete removing himself from these things, and this was a ripple effect. It wasn't just vendor management.

Then he let someone else take over accounts receivable. Then he let his finance people help make decisions and his operations decisions, right? And we were having weekly management meetings, monthly financial meetings. It was going through tax, it was going through exit planning, succession planning, the whole shebang. That was just one ripple effect of Pete letting go and letting go more and trusting his team. And eventually, that $13 million company that was owner dependent sold for $10 million.

And you used the Vine audit on him, right? I think that's... Absolutely. Yeah, the Vine audit was the first step. And then there was something else. There was another number that we used to track this, the owner dependency index. Tell us about this. So the owner dependency index essentially is we take a one to 10 scale across about 10 functions, right? Sales, delivery, client relationships, hiring, cash decisions, vendor relationships, quality control, accountability, process knowledge, and where escalations land, right?

And you need to have your team score you, and honestly. Right? And most owners self-score a four when the team would score them an eight, right? And usually the team is right. And so we wanna make sure that, you know, a 10 means that the business collapses if you take a week off, right? So we got a reverse scale hill, you want to be at one, not 10.

Yeah. Right? It's how much you impact stuff. Exactly. So if you've got a ton of impact, 10. You're wrecking things. Whereas if you have minimal impact, it's a one. You're only getting away a little bit or you're at the right level, ideally. That's the scale. And everyone hears about these folks who live in Aruba, who have a business in Kansas City and they're running it from Aruba because their team is handling everything in Kansas City and they just pop on to a meeting here and there, make sure that their business is running well and then they get to stay on the beach and drink piña coladas all day long.

That's the owner dependency of one. That's what we're all shooting for. We're not shooting for the tens. And so buyers are paying for cash flow that continues after you leave. They want to buy businesses closer to a one than a 10. A 10 means that they're buying a job with overhead. They're buying a job with stress. They are the ones that have to work 80 hours a week.

Why would I pay somebody a million dollars to make $150,000 a year cash flow and work 80 hours a week? I could probably just get a W2 job to do that. And so if you're closer to a 10, a couple things are going to happen in the buying process. They're going to walk because it looks purity on the outside, but then when you look underneath the hood, it's all owner dependence.

The owner's the hamster on the wheel turning the engine. Two is they're going to low-ball you because it's a job with headaches and stress. And three is they're going to build an earn-out that chains you to the desk for three more years, making sure that the relationships, everything that you've done that you've cultivated, the processes that you haven't written down are going to be done in the next three years.

And they're going to switch over to the new buyer because that's the only way they can do that. So in terms of walk, low ball, or have an earn-out for a number of years, pick your favorite poison. Yeah. Right? Because if you're the bottleneck, it's going to be one of those three. Right? And it's a huge swing. Right? Like we know a difference in score. Somebody with a score of eight versus a score of three, there's a big swing on multiples.

Right? The eight score may be a three times multiple. The three score may be a six times multiple. $2 million of business, that's a $6 million swing, that's huge. So these are real numbers, real things. They absolutely are. If you ever want to try to sell your business, this is one of the biggest things that you can do is get yourself out of being in the bottleneck.

For the owner listening, let's help them. I think we've mentioned a few of these things. Give them something to take away and get working on, where do they start? They know they're the bottleneck, where do they start? They should be realizing it. I mean we're hammering it now, right? Like guys out there, you are in some way, shape or form. We still are. Like we know we're bottlenecks in our organization. We try and create processes to be able to recognize it and get through it relatively quickly. I'm going through a real bottleneck phase at the moment because of some new areas. And that's okay, but as long as you realize it and plan it out. So these owners should be realizing that they need to do something about it. Where do they start? What's the actual playbook?

Sure. And to your point, Jon, you know, it's okay that sometimes you are the bottleneck. It's about releasing yourself from that bottleneck in a permanent fashion. Right. So it should be temporary. I'm like a temporary government program. We don't want it to become permanent. Right. Yeah, right, so we don't want to be that ball neck. So there's, I think there's five things that an owner can do. One is run the Vine on it, five days, every decision written down. You know, and you can't fix what you can't see, so delegate, elevate, eliminate, those kind of things. To build an accountability map. This is different from an org chart, a map of who owns what outcome, right?

We always talk about clear expectations, clear outcomes. That's what every employee should know what there is. There should be a single owner per seat. And if two people own it, nobody owns it. It's like having, if I have two bosses, right, boss Tom tells me to do one thing, boss Sarah tells me to do another thing, I'm the employee, I'm going to piss somebody off. So we want to have one person in one seat.

You got to install a weekly Level 10, L10 meeting as it's heard. 60 to 90 minutes depending on your attention span. Same day, same time, start on time and end on time with a scorecard that the team owns. So this is part of the SOS methodology. This is the best way to take stuff off your plate because you're going to give people to-dos to get them done. And that's how you're going to solve issues.

And if you have 15 to-dos out of that meeting, you're the bottleneck. You didn't do the Vine. Right? And it will allow you to let your team grow and build trust with you that they can get things done. Right? This is a very important part of that. Four is document the three decisions that come to you most often. Right? One great book to read is The One Minute Manager Meets the Monkey.

Right? Get the monkey off your back. Don't let somebody pass you their monkey. Pass it back to them. Show them how to deal with the monkey, how to feed the monkey, how to grow the monkey, and then off it goes. Monkey being the fact that someone gives you their problem and then for you to resolve, no. That's what you're paying them for. I think the first one, the last one, is take a real vacation.

You've installed these things for a good amount of time, take a real vacation. Two weeks. No phone, no email, no just one quick question, right? Whatever survives is your business. Whatever doesn't was a fire you were maintaining, right? Either result is gold. It gives you great information of what's going on and your family will thank you for it, right? You'll actually be present on the vacation. Yeah. Yeah. I can do that. Let's do it right now.

I know you've got one plan. You've got a big one. I've got one plan, Jon. I'm going to Europe for two weeks with my family and we are planning for that. I've empowered my team. They're taking on more and more every single time and I won't be answering my phone or emails or anything like that, it is work towards a goal, right? I was able to take off 10 days last December without the phone and emails, but days 11 through 14, those were planned work days, right?

Now it's two weeks. And it does take time to get from 10 days to two weeks, right, it just doesn't happen overnight. It's 1% incremental changes in progress. North Country business owners, are you working harder than ever and still feeling like the business is running you? There's a better way. In partnership with the St. Lawrence County Chamber of Commerce, join Ryan McGarghan, founder of Synergy Solutions, for a free business mixer at Esther's Coffeehouse in Massena, Saturday, June 13th at 1:30.

Ryan will walk you through how to generate more profit with less stress. A proven framework that drives real profit, frees up your time, and builds a business that runs the way it should. Coffee's on the house, and sign up on the day to receive Ryan's new book when it launches. Don't forget to bring your most important business question. Register for free at WeAreSynergySolutions.com/esters, that's E-S-T-H-E-R-S, or visit S-L-C chamber dot org.

Okay, last question. Those are very specific steps. That's great. I mean, that really should give people all the ammo they need to be able to move forward. How long does this typically take? There are challenges along the way. This isn't something you solve overnight. No, absolutely not, Jon. This takes time. It takes focus, right? So it depends on the level of the owner on how much they wanna get rid of the divine.

You just can't say, well, it's your problem now, team. You've given them no tools to make those decisions. You've got to build the tools, you've got to build the systems, right? It could take somebody, if they're almost primed to get there, it could take them just a matter of a couple months to get there. Others, it might take a few years, right? And that's the thing that people need to understand is that the things that we talk about, it's not a fad diet, it's not a diet pill, it's not a quick fix.

It is an intentional investment in your future. And it takes time. And there's gonna be bumps in the road. Growth is not linear, right? It's not a straight line that goes up, right? There's bumps in the road. It's like a roller coaster. It goes up, a little down, up, a little down, that kind of stuff. But I guess the best way to say this, it's like a snowball when you put it down the hill, right?

It gains momentum and traction and all that stuff. It doesn't mean that the ground is perfectly flat. You hit a rock every once in a while, it tumbles, that kind of stuff. So in order to sell your business, it usually takes between three and seven years to tidy everything up. That's the same way with investing in your folks, is that it could take six months, it could take three years, five years, whatever that might be, because you might not have the right people on your team.

You might be such a specialized process that it's gonna take somebody two years to understand it. Right. Right? Yeah, and you gotta work on your model too. Like you gotta have the right people at the right price. So, you know, if you can't afford to hire the team to be able to execute properly, there's something wrong with your product or margin level. Right? You gotta work through these things.

You're absolutely right, right? So then you have to Profit First it for a new hire. And that might take you six, 12, 18 months to get the money socked away to make that investment, for those people. So everything we talk about, it leads back down to intentionality and accountability and the operator, the owner, willing to make changes for the better because most of the people we talked to in the beginning, they don't have a sellable business.

So if something happens to them, their doors are gonna be shuttered in just a matter of weeks. Awesome. Awesome. This is a really important session. This is probably one of our longer podcasts as well. We've gone into it in detail. We've given people specific steps. So I think we can't stress the importance of it. So people may see this in the podcast list and go, oh, this title, delegation or bottleneck.

I don't need to look at that. I hope people overcame that and actually did listen to it and do take these steps. I think it's super important. Ryan, why don't we give a better takeaway and wrap it up. I know we had a couple of thoughts about how do people screw up, but I think you've covered that in the actual description to some of these things, right?

Delegating and hovering, not really educating people on how to delegate properly. I think you walked through that well in one of the questions. So let's wrap up here and send people on their merry way. Sure. Indispensable isn't a compliment, it's a diagnosis. Every decision routing through you is a decision someone else could make faster, cheaper, and probably just as well. The Vine feels like control, it's actually a leash. Run the Vine audit this week, score your ODI, honestly, pick one thing to hand off by Friday. Two years of that discipline turns a job into a business and a business into something worth selling. Awesome. Awesome. Great episode. I will share one other point of note. We had an extra listener here. I'm up at the lake and I had a nice tick crawling up my neck halfway through the episode. So those watching on video, you can see if you can spot that moment. I pulled him off and he got to join

in. Got to be part of this. I don't know how we weave that into bottlenecks, but he was on my neck. There you go. Yeah, awesome. Great. That's a wrap. Thanks everybody. See you next time. That'll do it for this episode of From Burnt Out to Bought Out. If anything we talked about today hit home, do us a favor. Share this episode with another owner who needs to hear it. And if you're sitting there thinking they're talking about me, good. That's the first step. Head to the show notes and book a free triage call with our team. No pitch, no pressure, just a real conversation about where you are and what's possible. You can also find us on LinkedIn and at WeAreSynergySolutions.com. New episodes drop every week. Until next time, stop running the treadmill and start building something you can actually sell.